Das Public Kapital: How Much Would Higher German Public Investment Help Germany and the Euro Area?
Electronic Access:
Free Download. Use the free Adobe Acrobat Reader to view this PDF file
Summary:
Given the backdrop of pressing infrastructure needs, this paper argues that higher German public investment would not only stimulate domestic demand in the near term and reduce the current account surplus, but would also raise output over the longer-run as well as generate beneficial regional spillovers. While time-to-build delays can weaken the impact of the stimulus in the short-run, the expansionary effects of higher public investment are substantially strengthened with an accommodative monetary policy stance—as is typical during periods of economic slack. The current low-interest rate environment presents a window of opportunity to finance higher public investment at historically favorable rates.
Series:
Working Paper No. 2014/227
Subject:
Accommodative monetary policy Expenditure Financial sector policy and analysis Fiscal policy Fiscal stimulus Foreign exchange Monetary policy Public investment spending Real effective exchange rates Spillovers
English
Publication Date:
December 17, 2014
ISBN/ISSN:
9781498329934/1018-5941
Stock No:
WPIEA2014227
Pages:
45
Please address any questions about this title to publications@imf.org